Investment Q&A

Q: ETFs
- is it correct that net asset value is determined once daily based on the closing price for the day?
- if correct, shouldn't the trading price reflect changes during the day, disregarding the NAV at close of the previous day?
- if the trading price doesn't reflect changes during the day, I suppose, in the case of a big change in underlying securities during the day, one should postpone a trade decision until the NAV for the previous day is published
- when will the NAV for the previous day appear in the quotation services? By open of trading on the following day?

Q: With governments pouring money into businesses, dropping interest rates, Retirees and individual investors getting killed,(mostly by computers and algorithms) everything shutting down why don't they shut down the markets worldwide to stop the insanity and panic? This may seem simplistic but we make rules to protect ourselves in the mortgage market, we need to protect our companies and ourselves from sheer panic.
Mike

Q: It would be very interesting for you guys to comment on market liquidity, and bid/ask dynamics with this market sell off. Specifically; for every sale, there is a buyer, and the sellers and buyers keep transacting. But, perhaps there simply is less buyers and sellers overall, so it is forcing people who want out specifically, to receive a lower price to do so. Is liquidity of bid/ask shrinking in these panic like events? With this point, who are the general sellers in this market; retail, institutions or hedge funds, etc. Are ETFS triggering this selloff etc. I hold a lot of stock, but simply don't want to be the last holder in the game, when the so called passive investments helped create this melt up in the first place. If they are also the first to leave, that may be bad for smaller folks like me. So.... if you come back and say that we have whipsawed lower 20% plus, but in that time, less and less shares are being sold, that may imply that still large smart money is still here, with the same large market participants having faith. Any comments on these points would be helpful. Bill

Q: Hi Team,

In this panic selling who are the big sellers? ETFs, Institutional, pension funds etc and they are moving to cash since bonds are also sold along with stocks. I believe individual stock investors are very small percentage of market. Is there a website which shows etf outflows/inflows.

Keep up the great work.

Thanks

Q: retiring next week and now this happens
i will be totally dependent on dividend income
yes, i should have bond income but i don't
ytd shows:
50% of dividend portfolio is <20%>
50% at <37%>
should i sell <37%> portion to protect portfolio?

Q: Interest rate on our money in the bank or in gics is virtually zero. I always heard that in a disinflationary period, the worst place to be is in stocks. But would people not want to be in the stock market and at least get a good yield. So many dividends are over 4%. This is a contradicton. Can you explain it to me. Thanks.

Q: ‘Nervous nellie’ here...is cash (over 100k) safe in canadian account (brokerage or bank) ? Any Real need to spread it on different instution, or buy short bond, cd etc.

Q: Hello 5i Gurus,
The central bank authorities at the Bank of England and the ECB have, this past week given authorization to all banks (domiciled in the UK or Europe) that they will be allowed to release ALL of their strategic counter cyclical funds that they normally hold in reserve. From what I remember, this would be several hundreds of billions of pounds or euros. Question is: Does the US and Canada have similar "counter cyclical funds" (not sure if this is the correct terminology)? that they can use to support the economy temporarily?

Q: We Canadian like to drive and are willing block pipelines our resources re not worth anything if don’t export them our motor industry is dead how long government will be willing to pay our mortgages and pump funds in to our economy on borrowed funds
I think we re very near reccesion or let’s say reality check
Can I have your opinion on my assessment
We Canadians have very high debt so is our governments

Q: Can you comment on the repo purchases that have been ongoing and have ramped up recently in the US. Does this add another layer of concern to the markets or just what needs to be done in times like these? Is there any holding that might benefit from this?

Q: Hi, my question is more about next time the market goes into bear territory...
I currently own "SIL - Global X Silver Miner ETF" and always thought it would do better in market downturn. However, i am down 45% over past 3 weeks. Please help me understand why is it down so much.

Q: What do you think about leveraging into this decline. For example I could borrow $100,000.00 on my line of credit at 1 over prime. Prime currently at .75 percent. The interest is tax deductible. I could spread the investment out over 5 stocks that are paying over 5% and just let the dividends pay off the load. I have enough faith that we are close to the bottom and have no doubts that most blue chip stocks are not going to drop that much more.

Q: I hear you when you say that we shouldn't be too involved in playing the exchange rate between the Canadian and American dollar. But would this not be a reasonable way: buy sunlife in American dollars, since i have them. If the Canadian dollar goes up i sell in canadian dollars. If it goes down, i still have my American dollars in Sunlife that i had before
Looks good but am i missing anything?
Thanks

Q: Hi 5I,

Looking back to 2008 the utilities sector held relative well to the meltdown of the TSX. This time around ZUT is following the TSX down. One would think people still need hydro to heat/cook.

Can you comment on why this is happening? Is there a fear these companies will become insolvent due to their balance sheets?

Thx,
Chris M.

Q: With all the selling taking place, I am curious about what characterizes a buyer now. Someone suggested that companies are doing a lot of buying of their own stocks, which doesn't make sense to me. I would think a lot of average investors looking for bargains, especially high yields, are doing the buying. I would greatly appreciate your opinion on this.

Q: After the "blood in the streets" kind of day we have had today, March 12, was I "crazy" to add to my holdings of the aforementioned? Are their dividends as reliable as I perceive them to be? FYI, I am a year away from retirement at age 60 and value dividend income for a portion of my portfolio.

Q: Q1. Can you describe a bit what actually happens when the FED says they will inject US 1 Trillion into the market. Where will that money go and is it a loan? In the 2009 recession, it was a loan to the collapsing banks which I think eventually got paid back.

Q2. Regarding increased dividend yield on falling values of stocks, how does this work? The funds are changing hands outside of the company, so if share price drop was the only thing to happen, theoretically the continuation of the dividend should not be in doubt. Maybe the business of the company might drop for some reason if share price drops.

Most grateful for all the guidance you provide to investors and the education you offer on the function of the stock market.

Q: First off I just want to say thank you so much for your special report you issued last week. For a young investor like myself who has never been through events like we currently are experiencing your advice has been extremely valuable to help navigate these uncharted waters.

I have been sitting on some cash and would like to increase my technology (both Canada and the US) exposure as it is low right now. I am comfortable with moderate risk. I have a few questions on this subject so feel free to subtract as many credits as you see fit:
1) For Canadian tech companies, after reading your special report and the Q&A's, it seems you like CSU, KXS, DSG, and SHOP. Would you recommend buying these individual companies (or others?) or would XIT be a reasonable alternative with these 4 companies composing ~61%? Or is there another tech etf you would suggest?
2) For US tech companies (or any US company for that matter), with the Canadian dollar being low, would you recommend looking at specific US companies or a Canadian ETF that holds US tech companies? I am worried the exchange would eat into possible returns. Do you have any recommendations (e.g. I have seen you mention XQQ for an etf, SKYY highlighted in etfupdate, and companies like MSFT, GOOG, TEAM, etc)?

Thanks for all that you do.

Q: Dear 5i;
I watch the Asian and Futures market in the evenings as a guide or possible indicator as to what North American markets might do the next morning / day and I'm sure I'm not alone in doing this .
I find it extremely irritating and unfair that I'm unable to take advantage of anticipated increases or decreases in the US and Can markets as a result of the Futures market being significantly up or down as the North American markets are already up or down big time before the markets are even open for trade ( ie the pre-market trading ).
Am i missing something here or are all of us ordinary investors stuck with this unfair system ( in my view anyways ) ?
Thanks
Bill C.

Q: Given that there are two sides to every trade, I was wondering: when the markets undergo panic selling, who is buying? Any insights you can provide would be appreciated.